Via Nick Setyan, an analyst at Wedbush, this is what the bulk chicken wing price has looked like since the start of 2012:

Wedbush

What’s going on here? We spoke with Mr. Setyan who gave some background to the drop – there are a few different things going on. First, corn prices have fallen significantly in the last six months, and as the main chicken feed, that has an impact on the cost of raising chickens.

More interestingly, he said McDonald's has been a heavy buyer of chicken wings in recent months, stockpiling them for one of its periodic wing specials. When McDonald’s hits the market it does so in a big way, and that extra demand was enough to send prices higher from the start of this year. Now that McDonald’s has bought up all the wings it needs and exited the market, prices have tumbled back down, he said.

The problem with chicken wings, Mr. Setyan said, is that supply is not very flexible: chickens are raised primarily for the breast meat, and the wings are a fortunate byproduct. So even when a big buyer like McDonald’s enters the market, “nobody’s going to produce more chickens just to cut off the wings.” Instead, the same amount of wings need to be sold to a larger crowd of buyers, and prices rise.

With corn prices falling and McDonald’s stepping away, prices are heading back down, and that’s good news for wing restaurants like Buffalo Wild Wings.

Rising prices had the industry looking for workarounds like “boneless” wings made of breast meat, or putting less wings on each plate. But falling prices means more profit: in a note today, Mr Setyan raised his earnings estimates for the Buffalo Wild Wings. The market seems to agree: Buffalo shares are up 8.5% this months and 26% this year.